How to avoid the cashflow mistakes that could derail your business

Paysafe VP Product, Card Present, Sarah Adams explores the revenue stream problems that affect small businesses and explains how they can be overcome.

When you’re a small business, there are a lot of financial pressure points that you need to juggle to ensure you have the budget to run things smoothly.

Forecasting future demand, for example, is vital to make sure you have the correct level of inventory in place and have staff hours properly mapped out to cope with demand. If you over-forecast on supplies, you can end up with too much inventory that you cannot sell or use, and have more staff than needed, all costing you money. Under-forecast, you could find yourself needing to purchase additional inventory and supplies or hire extra staff – all unplanned expenses that you must find the money for.

That’s not all though. There are other spontaneous expenses that you need to deal with as well, particularly budget to handle the repair of technical equipment – no business can function long without their computer or payment systems, for example.

The risk of unplanned expenses

Paying for these spontaneous costs can be a headache for smaller businesses. Many have low operating margins, running week-to-week or even day-to-day, with only a very small buffer to fall back on in an emergency.

The reason for these tight margins is simple. There is often a delay of a day or more before the money you have earned from sales actually reaches your account. The wait for funds can be even longer over the weekend or public holidays, due to bank operating hours.

Factoring in this delay in payment is a challenge, but necessary if you want your business to be able to cope with unforeseen expenses.

Planning is crucial

So, how can you get around this issue, and ensure your business has money to deal with all eventualities?

Well, one crucial solution is to plan your payment and collection structure as rigorously as you plan your inventory and staffing. You could negotiate with your suppliers to arrange a regular date to pay for their services and organize for your payment partner to pay your earnings into your account on a specific day of the week or month. You could even arrange to pay or collect a percentage of the money owed at regular intervals, further improving cashflow.

Taking these steps, you can not only ensure you have the money in your account to pay planned expenses, you can give yourself the flexibility to save up extra money for any emergency payments that need to be paid.

Preparing for the unplannable

But even the best laid of these plans can go wrong – sometimes you need the money you’ve earned on a given day immediately to pay for something urgent. So, it’s always important for your business to have a payment provider capable of helping you to get your money in your account as soon as possible.

Paysafe, for example, offers its new Accelerated Funding solution, with an Express Funding settlement option. This enables small businesses to receive their hard-earned money within hours, rather than having to wait days. Whether it’s a workday, a weekend, or a national holiday – you have access to your funds within a few hours of closing your batch. And unlike typical ACH settlements, these funds are available for use right away so you can cover any expense that comes your way.

This is just one way that your payment provider can support you in tackling day-to-day cashflow challenges and lay the groundwork for your business to thrive.

Talk to the experts

Cashflow is a challenge for all merchants, whatever their shape or size. While delays in revenue can be an inconvenience for larger retailers, they can be a matter of life and death for small and micro merchants.

Working with the right payment provider though, these small merchants can have the support they need to mitigate issues with cashflow, so they can have the financial cushion they need to protect their business for the unplanned and unexpected.